Home Team Vacation Rentals VR Reviews - Has anyone used them?
Rental Property Investor · Washington, DC · Member since 2015 · 88 posts · 45 votes
Home Team Vacation Rentals VR Reviews - Has anyone used them?
Most Popular Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votesThey don't appear to be anything special. They are just a PM that markets rentals.
Not sure what you are super excited about @Brandon S.
39 Replies
- 2yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
Is this a syndication type investment?
- Rental Property Investor · Washington, DC · Member since 2015 · 88 posts · 45 votes2y
@John Underwood It is not. Here is their website: https://www.hometeamvr.com/
- 2yAndrew SteffensBusiness MemberTampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
I did not spend too much time on it but how are they different than a PM?
Vacation Rentals of Florida53 Reviews - Rental Property Investor · Washington, DC · Member since 2015 · 88 posts · 45 votes2yBasically, they are a turnkey STR company. They find the property, manage the renovation and furnishing then manage it.
- 2yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
They don't appear to be anything special. They are just a PM that markets rentals.
Not sure what you are super excited about @Brandon S.
@Brandon S. How much did they quote you? Is ongoing management charges separated out from pre-ownership services - finding, renovating and furnishing? Looking at their website, they seem to be nationwide with a skinny presence in some markets, like just one unit for the entire city.
- Member since 2023 · 39 posts · 13 votes2y
I believe this is a Guru run operation. My limited experience with the Gurus is that are very rarely price competitive and target newer buyers. Your experience may vary.
- 2ySarah KensingerPro MemberReal Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
This company is completely on the up and up and is NOT a guru run operation! I'm again reminded at how small the STR world is on this forum. There really is whole STR world outside Biggerpockets!
Michael Elefante started this company to help busy investors with his business partner Eric Calwell. If you are a busy W-2 employee or running a company, Home Team Vacation Rentals can take care of all the nuts and bults of purchasing, setting up, and managing a STR. While the homeowner gets to take the revenue and real estate tax benefits. If this sounds like something that fits you, go for it and make sure to get a property somewhere you can enjoy as well!
- Rental Property Investor · Washington, DC · Member since 2015 · 88 posts · 45 votes2y
Thank you @Sarah Kensinger! Have you used them in the past?
- 2ySarah KensingerPro MemberReal Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
Quote from @Brandon S.:
Thank you @Sarah Kensinger! Have you used them in the past?
No, we do our own and help other investors as well. But have known of Michael for years and watched him grow his companies.
- Rental Property Investor · Boise ID · Member since 2020 · 9 posts · 4 votes1y
I am in the middle of a dispute with them right now. I watched Michael's content for a couple years was eager to get into the turn key program.
i gave them 20k to get started and then I had to stop the program after a just a couple property options were sent over. I couldn't do a second home loan they were penciling (other rental affecting DTI) and I didn't understand their $18/SQ ft design fee was in ADDITION to the 200k investment we had discussed. I had been really clear about exactly how much money I had up front.
I asked for my 20k back immediately after realizing that because I just didn't have the capital for it right now. I thought that would be a very reasonable request, but a month later they are still not willing to return that deposit.
Really surprised me, seemed like reasonable people. Unfortunately they're saying my contracts the contract, but I am getting a little concerned that I just lost $20k.
- Rental Property Investor · Washington, DC · Member since 2015 · 88 posts · 45 votes1y
Thanks for the info @Account Closed! What do you mean by the additional $18/sq design fee was not included? They never brought this up in the beginning?
- Rental Property Investor · Boise ID · Member since 2020 · 9 posts · 4 votes1y
The idea was if you have 200k you can get one of the properties like Michael shows on his Instagram and target 20-25% cash on cash returns. The idea is by spending big on amenities, you'll outperform other properties.
I had about 200k cash to invest, so I got on a call. There was an additional 20k fee for them to source you properties that would fit their model. I was excited to get started so I figured I would try to stretch and make that work.
They said their design fee was $18/SQ ft. And the budget was 15k/bedroom for furnishings. I recall asking if the 18/SQ ft was part of that 200k investment - the response was "Oh, you'll see all the costs broken out. It's all super transparent. And we'll send you a sample property so you can see the numbers breakdown."
They sent me a sample property breakdown, but it was a jpeg, not an Excel file. I was excited so I sent them 20k to get started.
First property comes over and I realize there is a second tab- one has the design fee, one doesn't. This is not an insignificant fee- we are talking $54k on 3000sq ft house. I say woah woah woah- I told you guys I only had 200k, this is putting me at like 270k invested with the 20k finders fee and design fees. No problem, we'll look for smaller, cheaper houses.
Then all the number breakdowns were based on 10% down payment using 2nd home loans. I spoke with two lenders who they suggested and the lender I normally work with and I could not qualify with my primary home and rentals. So I would have to do 20% down Dscr loan, pushing us again out of the budget.
At this point, they'd only sent me 3 properties and I realized it might not work so I requested we stop and honestly thought it would be a really reasonable request to return the 20k deposit/finders fee.
But they're not willing to return it.
- Rental Property Investor · Washington, DC · Member since 2015 · 88 posts · 45 votes1yDo they require you to pay the design fee or is it optional? They sent me the Excel files over and I was made to believe it was optional.
- Rental Property Investor · Boise ID · Member since 2020 · 9 posts · 4 votes1y
I forgot to mention, it's meant to be turnkey so they manage it, and their split is 10% of gross income before all costs and debt service etc.
But now I feel a little stuck because this experience hasn't been good and I'm stuck in a partnership I'm not comfortable with.
- Rental Property Investor · Boise ID · Member since 2020 · 9 posts · 4 votes1yNo, it is not optional.
Quote from @Brandon S.:
Do they require you to pay the design fee or is it optional? They sent me the Excel files over and I was made to believe it was optional. - Member since 2025 · 2 posts · 0 votes1y
@Account Closed, any updates on your situation or experience with Home Team Vacation Rentals? I have been exploring them and other groups like The Short Term Shop to get started in STR investing.
Would you mind providing a full breakdown of HTVR's fee structure for potential investors like myself considering them vs other groups? You mentioned 20k finder's fee (is this for each property sourced or a one time fee for their program/etc), 10% maintenance fee on gross income, $18/SF design fee. Is there a separate furnishing fee or any other fees/charges you experienced?
For anyone else, have you experienced a similar pricing structure when setting up STRs apart from HTVR? Or, do you simply work with a realtor comfortable/familiar with STRs to source deals in your desired market, let the seller pay the realtor's 6% fee, find a designer to do design/furnishing, then decide between self managing vs hiring property management and paying the associated fees?
I don't mind paying someone for value if it saves a significant amount of time and work. However - people love to buy, but they hate to feel sold. If you feel like you are being nickled and dimed every step of the way, there may be a reason you feel this way. Then again, purchasing a true "turnkey" property means you are typically paying a higher premium in exchange for someone else delivering you a cash flowing, low maintenance asset.- 1yRyan MoyerBusiness MemberProperty Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 993 posts · 1k+ votes
Quote from @Nathan Watson:
@Account Closed, any updates on your situation or experience with Home Team Vacation Rentals? I have been exploring them and other groups like The Short Term Shop to get started in STR investing.
Would you mind providing a full breakdown of HTVR's fee structure for potential investors like myself considering them vs other groups? You mentioned 20k finder's fee (is this for each property sourced or a one time fee for their program/etc), 10% maintenance fee on gross income, $18/SF design fee. Is there a separate furnishing fee or any other fees/charges you experienced?
For anyone else, have you experienced a similar pricing structure when setting up STRs apart from HTVR? Or, do you simply work with a realtor comfortable/familiar with STRs to source deals in your desired market, let the seller pay the realtor's 6% fee, find a designer to do design/furnishing, then decide between self managing vs hiring property management and paying the associated fees?
I don't mind paying someone for value if it saves a significant amount of time and work. However - people love to buy, but they hate to feel sold. If you feel like you are being nickled and dimed every step of the way, there may be a reason you feel this way. Then again, purchasing a true "turnkey" property means you are typically paying a higher premium in exchange for someone else delivering you a cash flowing, low maintenance asset.
I would gander to guess that 99% of people do it the latter way you described. They find the deal, hire their own designer, etc.
The reality is that it's expensive either way. $18/SF actually seems pretty reasonable if they're talking about both adding Airbnbable amenities and outfitting the property as an STR.
Because even just outfitting it as an STR is more expensive than you'll prepare yourself for. I don't know how many pillows or towels or sheets you think you need, but even if you're trying to hilariously over predict the number, you're probably guessing too low. A well stocked kitchen, carbon monoxide detectors, fire extinguishers, etc. That's always my least favorite part of taking on a new managed property is going through what is needed with the owner, because it's always expensive and they're always under-equipped.
After the initial setup it's the same. I think it's impossible to operate an STR without feeling nickel and dimed, even if you're self managing and nickel and diming yourself, just because there are so many expenses that you would never consider before you actually did it. That's more true now than ever before as Airbnb has further and further stripped hosts of their ability to reasonably recoup costs from bad guests without sabatoging your own business. 3rd party damage insurance like Waivo or Safely is a must these days but that's yet another cost that feels like nickel and diming.
It's just the reality of the business. People just didn't care as much pre-2023 when everyone was rolling in money. And setup costs didn't hurt as much when you were cash flowing $8k/month right out of the gate because you knew you'd recoup it fast. It's a different ballgame now with returns depressed, but the reality of the business hasn't changed and there's not really any way to skip over that part without damaging your future returns by more than you're saving up front.
Cosmic Vacations4.9174 Reviews
- Rental Property Investor · Boise ID · Member since 2020 · 9 posts · 4 votes1y
Just to be clear the 18/ SQ foot is JUST the design fee, does not include furniture or anything. I paid another 60k for the furtinture. I did end up working with them so I will respond in more detail a bit later.
dothe math in a 3k sq foot house - that 18/SQ is pretty spendy, then another 60k on top of that.
I'll explain how I made this work later today when I have a little more time.
- Member since 2019 · 1 post · 0 votes1y
Quote from @Account Closed:
Just to be clear the 18/ SQ foot is JUST the design fee, does not include furniture or anything. I paid another 60k for the furtinture. I did end up working with them so I will respond in more detail a bit later.
dothe math in a 3k sq foot house - that 18/SQ is pretty spendy, then another 60k on top of that.
I'll explain how I made this work later today when I have a little more time.
@Account Closed I'm VERY interested in your experience as I am looking at using them to source and setup an STR for me.
Quote from @Loretta Chavez:
Quote from @Account Closed:
Just to be clear the 18/ SQ foot is JUST the design fee, does not include furniture or anything. I paid another 60k for the furtinture. I did end up working with them so I will respond in more detail a bit later.
dothe math in a 3k sq foot house - that 18/SQ is pretty spendy, then another 60k on top of that.
I'll explain how I made this work later today when I have a little more time.
@Account Closed I'm VERY interested in your experience as I am looking at using them to source and setup an STR for me.
save yourself some heartache and check out strsearch.com
- Interior Decorator · Chicago, IL · Member since 2025 · 31 posts · 40 votes1y
This is great insight and thank you for sharing. I worked with HomeTeamVR in a different capacity (as an art vendor they sourced from for the design portion).
While I can't speak to the PM side, I do know that other STR design companies tend to charge significantly less for design ($2 per square foot), sourcing ($12 - 15 per square foot for the decor), and install, and are generally more transparent throughout the process.
Sorry to hear you went through such a stressful experience.
@Josh Havekost Bumping this thread as I'm in the same boat, and would be grateful if you can share more details. I just had a call with them and curious of both the sourcing/setup and ongoing experience with them.
Does anyone have any other suggestions/experience for an alternative "white glove" service for sourcing and preparing STR properties? Just trying to evaluate options.
Quote from @Ryan Oder:
@Josh Havekost Bumping this thread as I'm in the same boat, and would be grateful if you can share more details. I just had a call with them and curious of both the sourcing/setup and ongoing experience with them.
Does anyone have any other suggestions/experience for an alternative "white glove" service for sourcing and preparing STR properties? Just trying to evaluate options.
Ryan - I'm biased because I head sales for STR Search, but give John Bianchi's service a look.
It's a much more data-driven process than what elefante is serving up. It's also more cost-effective and has a better track record of performance. Oh, and we think the guru model is bullsh!t, so we provide our analysis class for free on the website for anyone who wants to DIY the search.
- Property Manager · Erie & Millscreek PA | Maggie Valley & Haywood County NC · Member since 2024 · 264 posts · 119 votes1y
I haven’t worked with them personally, but I’d recommend asking for references from current owners and checking reviews outside their site. If it sounds too good to be true, digging deeper into fees and actual occupancy numbers will give you a clearer picture.
- Member since 2026 · 2 posts · 1 vote8mo
Brandon - did you end up using them? I have a property that I acquired through their process and I’ve been very disappointed with its performance and their management of my property (been live for just under 1 year). You’ve probably already made your decision but wanted to warn anyone else considering this company, they give a great sales pitch but so far has been a terrible investment for me.
- Rental Property Investor · Washington, DC · Member since 2015 · 88 posts · 45 votes8mo
Quote from @Kelly Conway:
Brandon - did you end up using them? I have a property that I acquired through their process and I’ve been very disappointed with its performance and their management of my property (been live for just under 1 year). You’ve probably already made your decision but wanted to warn anyone else considering this company, they give a great sales pitch but so far has been a terrible investment for me.
Sorry to hear that @Kelly Conway! No I did not. I've heard nightmares. Can you elaborate on your experience?
- Member since 2026 · 2 posts · 1 vote8mo
@Brandon S. Sure. Sorry for the rambling but it’s a mess. In a nutshell they are a horrible PM and their models were unbelievably off.
We paid the $20k up front and spent about 2 months reviewing weekly investment houses they recommended. I wasn’t stoked about any to be honest but their models showed plenty of room for error with how high the returns looked (16-25%). Finally landed on one. The process to closing was definitely not turnkey. I spent at least 40-60 hours on paperwork, work with realtor, work with mortgage lender and so on. After close however it was more hands off for me as they took over.
We bought a place in FL, closed in Nov with hopes to be live early Jan. They were so delayed on getting us live we missed Jan, Feb and early March so when we went live for the best period of the year (spring break) we had to offer discounted rates because we had no rental history.
Since closing on the house 14 months ago, I’ve had to invest an additional $16k to stay afloat. I’m to the point where I’ve completely forfeited the idea of this place being profitable and I’m begging them to help us break even until hopefully the property value can increase enough to sell and recoup some of the investment.
We stayed on budget on the home cost, Reno and design. Where the modeled MAJORLY failed was the avg nightly rate. They projected $547/night and we are getting in the 200s. I’ve mentioned rates to them (they manage it) half a dozen times but they don’t take my feedback. They also severely understated monthly expenses such as lawn care, pool maintenance, etc. They claimed to have other houses in the area so I trusted their numbers but in total they are at least $500 per month off. They nickel and dime me for everything ($75 “trip surcharge” for replacing a propane tank for the grill on top of the propane cost). In November I told them my electricity bill was outrageous and asked them to look into it They never did After numerous follow ups I asked if it could be the pool heater. They replied that they realized a renter had turned it on but there’s no way to know who did it. It was running for 8 weeks nonstop!! That alone cost us $800.
Ok rant over. DO NOT USE THEM. They are horrible.
- Rental Property Investor · Washington, DC · Member since 2015 · 88 posts · 45 votes8mo
Quote from @Kelly Conway:
@Brandon S. Sure. Sorry for the rambling but it’s a mess. In a nutshell they are a horrible PM and their models were unbelievably off.
We paid the $20k up front and spent about 2 months reviewing weekly investment houses they recommended. I wasn’t stoked about any to be honest but their models showed plenty of room for error with how high the returns looked (16-25%). Finally landed on one. The process to closing was definitely not turnkey. I spent at least 40-60 hours on paperwork, work with realtor, work with mortgage lender and so on. After close however it was more hands off for me as they took over.
We bought a place in FL, closed in Nov with hopes to be live early Jan. They were so delayed on getting us live we missed Jan, Feb and early March so when we went live for the best period of the year (spring break) we had to offer discounted rates because we had no rental history.
Since closing on the house 14 months ago, I’ve had to invest an additional $16k to stay afloat. I’m to the point where I’ve completely forfeited the idea of this place being profitable and I’m begging them to help us break even until hopefully the property value can increase enough to sell and recoup some of the investment.
We stayed on budget on the home cost, Reno and design. Where the modeled MAJORLY failed was the avg nightly rate. They projected $547/night and we are getting in the 200s. I’ve mentioned rates to them (they manage it) half a dozen times but they don’t take my feedback. They also severely understated monthly expenses such as lawn care, pool maintenance, etc. They claimed to have other houses in the area so I trusted their numbers but in total they are at least $500 per month off. They nickel and dime me for everything ($75 “trip surcharge” for replacing a propane tank for the grill on top of the propane cost). In November I told them my electricity bill was outrageous and asked them to look into it They never did After numerous follow ups I asked if it could be the pool heater. They replied that they realized a renter had turned it on but there’s no way to know who did it. It was running for 8 weeks nonstop!! That alone cost us $800.
Ok rant over. DO NOT USE THEM. They are horrible.
Man oh man! Thank you for the feedback @Kelly Conway! I definitely will not use them. Hope it gets better!
Quote from @Kelly Conway:
@Brandon S. Sure. Sorry for the rambling but it’s a mess. In a nutshell they are a horrible PM and their models were unbelievably off.
We paid the $20k up front and spent about 2 months reviewing weekly investment houses they recommended. I wasn’t stoked about any to be honest but their models showed plenty of room for error with how high the returns looked (16-25%). Finally landed on one. The process to closing was definitely not turnkey. I spent at least 40-60 hours on paperwork, work with realtor, work with mortgage lender and so on. After close however it was more hands off for me as they took over.
We bought a place in FL, closed in Nov with hopes to be live early Jan. They were so delayed on getting us live we missed Jan, Feb and early March so when we went live for the best period of the year (spring break) we had to offer discounted rates because we had no rental history.
Since closing on the house 14 months ago, I’ve had to invest an additional $16k to stay afloat. I’m to the point where I’ve completely forfeited the idea of this place being profitable and I’m begging them to help us break even until hopefully the property value can increase enough to sell and recoup some of the investment.
We stayed on budget on the home cost, Reno and design. Where the modeled MAJORLY failed was the avg nightly rate. They projected $547/night and we are getting in the 200s. I’ve mentioned rates to them (they manage it) half a dozen times but they don’t take my feedback. They also severely understated monthly expenses such as lawn care, pool maintenance, etc. They claimed to have other houses in the area so I trusted their numbers but in total they are at least $500 per month off. They nickel and dime me for everything ($75 “trip surcharge” for replacing a propane tank for the grill on top of the propane cost). In November I told them my electricity bill was outrageous and asked them to look into it They never did After numerous follow ups I asked if it could be the pool heater. They replied that they realized a renter had turned it on but there’s no way to know who did it. It was running for 8 weeks nonstop!! That alone cost us $800.
Ok rant over. DO NOT USE THEM. They are horrible.
I had never heard of them. Looked at their site, they've got some impressive properties but sounds like might be best to cut ties & move onto either another PM or another property. What are the terms as far as having the property delisted & put it onboard with a smaller PMS locally? Those big nationwide PMS can sometimes get out of hand & you just become a number rather than a client.
- Member since 2026 · 5 posts · 0 votes7moKelly, I am also a client of Home Team. Please reach out to me at 267-240-6177. Thank you. Angela
Quote from @Kelly Conway:
@Brandon S. Sure. Sorry for the rambling but it’s a mess. In a nutshell they are a horrible PM and their models were unbelievably off.
We paid the $20k up front and spent about 2 months reviewing weekly investment houses they recommended. I wasn’t stoked about any to be honest but their models showed plenty of room for error with how high the returns looked (16-25%). Finally landed on one. The process to closing was definitely not turnkey. I spent at least 40-60 hours on paperwork, work with realtor, work with mortgage lender and so on. After close however it was more hands off for me as they took over.
We bought a place in FL, closed in Nov with hopes to be live early Jan. They were so delayed on getting us live we missed Jan, Feb and early March so when we went live for the best period of the year (spring break) we had to offer discounted rates because we had no rental history.
Since closing on the house 14 months ago, I’ve had to invest an additional $16k to stay afloat. I’m to the point where I’ve completely forfeited the idea of this place being profitable and I’m begging them to help us break even until hopefully the property value can increase enough to sell and recoup some of the investment.
We stayed on budget on the home cost, Reno and design. Where the modeled MAJORLY failed was the avg nightly rate. They projected $547/night and we are getting in the 200s. I’ve mentioned rates to them (they manage it) half a dozen times but they don’t take my feedback. They also severely understated monthly expenses such as lawn care, pool maintenance, etc. They claimed to have other houses in the area so I trusted their numbers but in total they are at least $500 per month off. They nickel and dime me for everything ($75 “trip surcharge” for replacing a propane tank for the grill on top of the propane cost). In November I told them my electricity bill was outrageous and asked them to look into it They never did After numerous follow ups I asked if it could be the pool heater. They replied that they realized a renter had turned it on but there’s no way to know who did it. It was running for 8 weeks nonstop!! That alone cost us $800.
Ok rant over. DO NOT USE THEM. They are horrible.
- Member since 2026 · 5 posts · 0 votes7mo
@Account Closed I have had a similar experience with Home Team. I am curious about the outcome. Did you ever get the $20k back? Angela
- Rental Property Investor · Boise ID · Member since 2020 · 9 posts · 4 votes7mo
A few people have reached out to me from this post, I've been meaning to circle back. This got crazy long, so I apologize. I am working with them, so I am being careful not to bash them, but I will try to be honest.
[TL:DR - The only way this makes sense for me is buying significantly under-market value, not off ZIllow. The design fee of $18/ sq ft not including furtinure from Somerled Designs is INSANE. That will ruin your numbers. They did a great job and were very nice. But I could have had a decorator do it for 1/3th the price I'm sure. Hometeam has been managing the property well, and bookings and reviews have been good. I remain cautiously optimistic, and will see how this calendar year goes.]So, in the end here is how I made this work as best I could. I misunderstood the design fee. I was excited on the call, and was basically just already in. Should have been more careful. When I realized I lacked the capital, I requested a refund, but they refused. I didn't ask just once either- I was very surprised by their refusal. I thought maybe I should take that as a signal, since you're entering into a very high-trust relationship with this entity and it starts out like that? But sunk-cost fallacy, it's easy to throw good money after bad, and I wasn't about to walk away from 20k as a whoopsie (I'm not quite there in my financial and real estate journey).
I reached an agreement to find the house myself and received a slight discount on the design fee. So in the end I *kind of* got my money back. I found an off-market property near Gatlinburg from a wholesaler. I had the house under contract for about 719k and an appraisal in-hand for 1M. It was a divorce situation, so they had to move fast. I figured with that delta, I could make something work. The house is gorgeous, location is impeccable, but it was not quite finished 100%.
The issue was that they needed to close super fast (10-14 days) and I had bought a much smaller house in Texas that I was setting up for mid-term rental. So it was a whirlwind deal, but because I had the higher appraisal I secured a fix and flip loan to cover the garage conversion to a bedroom, add a half bath, and some hardscape putt-putt golf holes and a firepit area. And finish some of the work needed to complete the house.
Then we did a cash-out refi DSCR STR loan product for 75% LTV. And pulled about 125k back out after covering the fix-flip loan and the ~100k construction costs. (The construction costs were probably high, but could I have done this myself remotely? Absolutely not. We finally made it to TN to look at the house last week and they did really nice work) Now we have a high-interest-rate loan, but we pulled a decent amount of cash back and theoretically have a couple hundred thousand equity as well.
We went live at the end of the summer/early fall and were nicely booked throughout the fall and into the holidays. The Smoky Mountains are slightly seasonal, so we have had a couple slower months to start this year, but I expect things will pick up. It is stick season. The reviews have all been 5 star, and several have called out the management company positvely so I feel like they are at least making guests happy. When we went out last week, I did have some small feedback, the only major thing was that I wished the exterior furniture had been better protected for winter. It was expensive and some of the wood already looked rough. Definitely can't afford to replace furniture every year.
Ultimately, I felt OK about this deal because we bought it under market. Essientially a flip to myself. The thing I can't quite grasp about the high design fee is - if you buy a house for market value, spend $50k on design, and $60k on furniture, even if you cashflow $4k/month, you won't recoup the design fee for a year, and the furniture cost for another year. Then you get to the point of essentially breaking even—you own the house for its market value. I dont like that! At least in my situation, I can sell and exit this deal if it doesn't work. I might even make a little money if I sold it offmarket to another STR operator.
While we were there, my wife and I discussed it. Man, it felt great to post pictures of this compared to our other basic rentals that we run as mid-terms. But what about dollars in versus dollars out? I think the non-sexy stuff might be better. The reason I say that is, while I was there, I sensed that significant maintenance and capital expenditures could be on the horizon, and the property can't break even for the year and then face that maintenance.
There is a spot we could put a pickleball court. This would be unique for cabins in the saturated Gatlinburg market, so if it performs well enough this year we might add it to boost. Or we sell to someone looking for a tax shelter at the end of the year and they can do it!
The design and construction turned out really well. Coordinating the delivery and installation of everything remotely, especially since this place is at the top of a mountain, would have been a nightmare.We are moving to Thailand in a couple weeks, so having them manage it is nice. I don't really like communicating with guests. But surely any management company would cover that aspect to varying degrees.
- 7moJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
Quote from @Account Closed:
A few people have reached out to me from this post, I've been meaning to circle back. This got crazy long, so I apologize. I am working with them, so I am being careful not to bash them, but I will try to be honest.
[TL:DR - The only way this makes sense for me is buying significantly under-market value, not off ZIllow. The design fee of $18/ sq ft not including furtinure from Somerled Designs is INSANE. That will ruin your numbers. They did a great job and were very nice. But I could have had a decorator do it for 1/3th the price I'm sure. Hometeam has been managing the property well, and bookings and reviews have been good. I remain cautiously optimistic, and will see how this calendar year goes.]So, in the end here is how I made this work as best I could. I misunderstood the design fee. I was excited on the call, and was basically just already in. Should have been more careful. When I realized I lacked the capital, I requested a refund, but they refused. I didn't ask just once either- I was very surprised by their refusal. I thought maybe I should take that as a signal, since you're entering into a very high-trust relationship with this entity and it starts out like that? But sunk-cost fallacy, it's easy to throw good money after bad, and I wasn't about to walk away from 20k as a whoopsie (I'm not quite there in my financial and real estate journey).
I reached an agreement to find the house myself and received a slight discount on the design fee. So in the end I *kind of* got my money back. I found an off-market property near Gatlinburg from a wholesaler. I had the house under contract for about 719k and an appraisal in-hand for 1M. It was a divorce situation, so they had to move fast. I figured with that delta, I could make something work. The house is gorgeous, location is impeccable, but it was not quite finished 100%.
The issue was that they needed to close super fast (10-14 days) and I had bought a much smaller house in Texas that I was setting up for mid-term rental. So it was a whirlwind deal, but because I had the higher appraisal I secured a fix and flip loan to cover the garage conversion to a bedroom, add a half bath, and some hardscape putt-putt golf holes and a firepit area. And finish some of the work needed to complete the house.
Then we did a cash-out refi DSCR STR loan product for 75% LTV. And pulled about 125k back out after covering the fix-flip loan and the ~100k construction costs. (The construction costs were probably high, but could I have done this myself remotely? Absolutely not. We finally made it to TN to look at the house last week and they did really nice work) Now we have a high-interest-rate loan, but we pulled a decent amount of cash back and theoretically have a couple hundred thousand equity as well.
We went live at the end of the summer/early fall and were nicely booked throughout the fall and into the holidays. The Smoky Mountains are slightly seasonal, so we have had a couple slower months to start this year, but I expect things will pick up. It is stick season. The reviews have all been 5 star, and several have called out the management company positvely so I feel like they are at least making guests happy. When we went out last week, I did have some small feedback, the only major thing was that I wished the exterior furniture had been better protected for winter. It was expensive and some of the wood already looked rough. Definitely can't afford to replace furniture every year.
Ultimately, I felt OK about this deal because we bought it under market. Essientially a flip to myself. The thing I can't quite grasp about the high design fee is - if you buy a house for market value, spend $50k on design, and $60k on furniture, even if you cashflow $4k/month, you won't recoup the design fee for a year, and the furniture cost for another year. Then you get to the point of essentially breaking even—you own the house for its market value. I dont like that! At least in my situation, I can sell and exit this deal if it doesn't work. I might even make a little money if I sold it offmarket to another STR operator.
While we were there, my wife and I discussed it. Man, it felt great to post pictures of this compared to our other basic rentals that we run as mid-terms. But what about dollars in versus dollars out? I think the non-sexy stuff might be better. The reason I say that is, while I was there, I sensed that significant maintenance and capital expenditures could be on the horizon, and the property can't break even for the year and then face that maintenance.
There is a spot we could put a pickleball court. This would be unique for cabins in the saturated Gatlinburg market, so if it performs well enough this year we might add it to boost. Or we sell to someone looking for a tax shelter at the end of the year and they can do it!
The design and construction turned out really well. Coordinating the delivery and installation of everything remotely, especially since this place is at the top of a mountain, would have been a nightmare.We are moving to Thailand in a couple weeks, so having them manage it is nice. I don't really like communicating with guests. But surely any management company would cover that aspect to varying degrees.
Great move on finding a Non listed property at a discount. So many people only look at turnkey for top dollar.
How did you find the wholesaler?
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